We've asked Michael Seery of SEERYFUTURES.COM to give our INO readers a weekly recap of the Futures market. He has been Senior Analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.
Michael frequently appears on multiple business networks including Bloomberg news, Fox Business, CNBC Worldwide, CNN Business, and Bloomberg TV. He is also a guest on First Business, which is a national and internationally syndicated business show.
Gold Futures
Gold futures in the December contract are trading far below their 20 and 100 day moving average plummeting for the 2nd consecutive trading session down another $30 at 1,168 an ounce hitting a 4 1/2 year low as the Japanese government stated that they are going to engage into more quantitative easing sending the Japanese Yen sharply lower against the U.S dollar therefore pressuring the precious metals today. Gold futures settled around 1,231 last Friday finishing down around $60 dollars as the trend is clearly to the downside, however the chart structure is very poor at the current time so I’m sitting on the sidelines in this market, however I am certainly not recommending any type of bullish position in the gold market as prices go lower in my opinion with a possible retest of $1,100 here in the near future. All of the interest is back into the S&P 500 once again as the stock market hit an all-time high as money is flowing out of the precious metals and many of the commodity markets and putting it back to work in the stock market and I don’t think that trend will end any time soon as the months of November and December are historically bullish for the S&P 500 and bearish for the gold market so continue to play this to the downside and take advantage of any rally making sure that you place the proper stop loss. As I had written in previous blogs I was always concerned of the fact that gold prices were not rallying with all the problems with Isis and numerous other catastrophes throughout the world & that made me nervous as prices now look very weak as there is no reason to own gold at the current moment.
TREND: LOWER
CHART STRUCTURE: AWFUL
Crude Oil Futures
Crude oil futures continued their bearish trend as the Japanese government announced new quantitative easing which sent the Japanese Yen currency down over 200 points while pushing up the U.S dollar over 70 points also sending crude oil in the December contract down to 80.55 still trading below its 20 & 100 day moving average after settling last Friday in New York at $81 finishing slightly lower for the trading week as prices are trading in a very tight channel market I would place my stop above the 10 day high which currently stands at 83.23 risking around $3 or $3,000 per contract. I missed this trade to the downside as the chart structure was poor at the time so I did not take this trade and I’m kicking myself at the current time, however I have not been recommending any type of bullish position in this market as I do think the market is headed lower as the United States is awash in supplies and the fact that the U.S dollar is going to continue to move higher against the foreign currencies as they continue their quantitative easing as the United States has ended its program so this is a mathematical equation here as there is a high probability that the foreign currencies and the Japanese yen will continue to move lower against the U.S dollar. As I stated earlier in the article I missed this trade and I am kicking myself but sometimes that happens, however you must recognize a trend and when you see one but I never was recommending to get long this market because of the fact that the trend is lower so my point is I truly do believe over the long haul become a trend follower as that will make you more successful than playing the market counter trend as you should be short this market not long this market as the path of least resistance is to the downside at the current time.
TREND: LOWER
CHART STRUCTURE: IMPROVING
Silver Futures
Silver futures in the December contract are sharply lower this Friday afternoon in New York down another $.35 at 16.07 and traded as low as 15.63 hitting a 4 year low as investors are fleeing out of the precious metals as the U.S dollar was up sharply once again as the Japanese government announced quantitative easing sending the precious metals to new multi-year lows and it looks to me that trend will continue. If you took the original recommendation when prices broke 20.40 several months ago as silver has still not hit a 10 day high on a closing basis so continue to place your stop loss above the 10 day high which currently stands at 17.37 as the chart structure is terrible at the current time due to the fact that prices have absolutely fallen off a cliff. Silver futures are trading far below their 20 & 100 day moving average telling you that this trend is very strong to the downside and its extremely difficult to pick a bottom so I still think prices are headed lower with the next major support level around 15.50 & if prices break that level there’s a possibility that prices could head even lower which is astounding to me because silver is used as an industrial metal and used in many electronics which are selling off shelves but investors don’t seem to have any interest because of a strong U.S dollar and a deflation scare throughout the world especially in Europe. The chart structure in silver has been outstanding for several months before the last couple of days and that is why I stick with my 10 day rule because it’s amazing how long some trends can stay but many trends fizzle out very quickly but the object of trading the commodity markets is to try to hit a home run once in a while so continue to stick to the rules.
TREND: LOWER
CHART STRUCTURE: AWFUL
Cotton Futures
Cotton futures in the December contract are trading above their 20 but still below their 100 day moving average settling last Friday at 63.81 currently trading at 64.10 up slightly for the trading week as an active harvest is currently underway in the southern part of the United States which should keep a lid on prices here in the short term. The problem with cotton is the fact of very large world stocks with slowing demand due to the fact that the U.S dollar was up sharply once again as the Japanese announced quantitative easing sending the U.S dollar to new highs which certainly could pressure commodity prices and especially cotton. The next major support level in cotton is at 62 with major resistance at 66 with a possible head and shoulders bottom being created in the last 3 months as we are basically trading sideways as I am neutral on this market at the current time but the chart structure is outstanding so keep an eye on this market as a breakout is looming.
TREND: MIXED
CHART STRUCTURE: EXCELLENT
If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
Lean Hog Futures
Lean hog futures in the February contract are currently trading in Chicago at 88.10 up slightly this Friday afternoon after settling last week at 88.87 dropping around 70 points this week still trading in a tight 2 week channel as I’ve been recommending a short position for quite some time. If you took the original trade place your stop loss above the 2 week high which stands at 89.47 which was also last Wednesdays high. In my opinion I think prices will try to retest the mid-August low of around 83.50 as hog supplies should certainly increase since the deadly virus is behind us which happened earlier in 2014 and I do think with lower feed costs and high margins that supplies will increase and they will be much more abundant in 2015 in my opinion. The chart structure in hogs is outstanding at the current time and even if you didn’t take the original trade you can still enter at today’s price while risking around $1,000 dollars per contract as the hog market is highly volatile with big price swings with high risk/reward. Cattle prices continue to remain strong and keep hovering around all-time highs and that is helping support hog prices, however if cattle can break to the downside I think hog prices could drop rather dramatically so keep an eye on this market and play it to the downside.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Coffee Futures
Coffee futures in the December contract settled last Friday at 191.50 while currently trading at 188 this Friday afternoon in New York hitting a 4 week low as the chart structure is very poor at the current time as I’m still sitting on the sidelines as I do remain neutral at the current time. Coffee futures topped out several weeks at 225 as rains have come into critical growing regions of Brazil lowering concerns about another drought, as prices look weak in my opinion with the next major support level at 178 – 180, however the chart structure does not meet my requirements so I’m sitting on the sidelines and I will wait for a better pattern to develop. If you are interested in getting short this market I would sell at today’s price while placing my stop above the 10 day high which will be lowered significantly come Tuesday to around the 195 level as coffee is a very large contract with high risk and high reward as the volatility certainly looks to remain high.
TREND: LOWER
CHART STRUCTURE: POOR
Orange Juice Futures
Orange juice futures in the January contract are trading below their 20 and 100 day moving average telling you that the trend is lower as I’ve been recommending a short position when prices broke below 140 and if you took the original trade make sure you place your stop above the 2 week high which currently stands at 142.40 which is around 350 points away or about $525 risk per contract. Orange juice futures closed last Friday at 140.75 so they finished slightly lower for the week as the longer-term downtrend line is still intact as large production is expected this year which could keep a lid here on prices especially if the commodity markets continue to go lower and the U.S dollar continues to move higher. The chart structure in orange juice is outstanding at the current time allowing you to place a very tight stop loss and that’s one of the strategies I like to use before entering a trade while always going over the risk reward situation and making sure that you can place the proper stop loss which is extremely important.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Sugar Futures
Sugar futures in the March contract are trading below their 20 and 100 day moving average as the long-term downtrend line is still intact settling last Friday at 16.38 settling today at 16.04 down 34 points for the trading week with major support at 15.91 and then the contract low of 15.50 as the daily chart has outstanding chart structure. I have been sitting on the sidelines in this market for quite some time as the trend currently is neutral to lower so look for a breakout as large supplies from several years of overproduction are continuing the hamper prices to the downside, but wait for a true breakout to occur before entering making sure you risk 2% of your account balance on any given trade as a retest of the contract low seems reasonable in my opinion as the commodity markets in general still look weak due to the fact of a very strong U.S dollar and the fact that the U.S government has ended our quantitative easing which definitely propped up commodity prices over the last several years.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
Wheat Futures
Wheat futures in the December contract finished down $.03 this Friday afternoon in Chicago closing around 5.32 a bushel still right near 7 week highs as prices continue to climb the ladder coming all the way from 4.65 just a month ago as the grain market certainly has caught fire in recent weeks. I am currently neutral in the grains, however if you are long the wheat market when prices hit a 4 week high of around 5.20 place your stop below the 10 day low which currently stands at 5.10 which is only about $.22 away or $1,100 risk per contract as the chart structure is outstanding at the current time as there are concerns about several crops around the world developing at the current time, however soybeans & the soybean meal have spurred the grain market sharply higher. Traders await the next USDA crop report in around 2 weeks showing the supply/ demand tables as well as crop production estimates as this market has major resistance around the 5.80 level and that’s where the breakout will occur in my opinion so I’m sitting on the sidelines and who knows how long this type of grinding chart pattern will last. The U.S dollar was sharply higher once again today and that’s generally pessimistic grain prices, however there has been a short squeeze in the soybean meal and that has sent all grain prices higher except for oats, however the trend is your friend and the chart structure is outstanding so this should be played to the upside.
TREND: HIGHER
CHART STRUCTURE: EXCELLENT
What do I mean when I talk about chart structure and why do I think it is so important when deciding to enter or exit a trade?
I define chart structure as a slow and grinding up or down trend with low volatility and no chart gaps. Many of the great trends that develop have very good chart structure with many low percentage daily moves over a course of at least 4 weeks thus allowing you to enter a market and allowing you to place a stop loss with will be relatively close due to small moves thus reducing risk. Charts that have violent up and down swings are not considered to have solid chart structure but markets that continue to trend like the current soybean complex allowing for you to place close stops as it continues to fall dramatically. I always like to place my stops at 10 day highs or 10 day lows and if the charts have a tight pattern that will allow the trader to minimize risk which is what trading is all about and if the chart has big swings your stop will be further away allowing the possibility of larger monetary loses.
If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
SEERY FUTURES ACCEPTS CANADIAN COMMODITY ACCOUNTS
There is a substantial risk of loss in futures, futures option and forex trading. Furthermore, Seery Futures is not responsible for the accuracy of the information contained on linked sites. Trading futures and options is Not appropriate for every investor. My opinion in this blog are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any futures or option contracts.
Michael Seery, President
Seery Futures
http://ift.tt/1fGCqDc
Twitter–@seeryfutures
Phone #: (800) 615-7649
mseery@seeryfutures.com
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